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Kaixin aims to ride high with mobile games
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Cheng Binghao founded kaixin001.com five years ago. It became China’s most popular social website, often dubbed China’s Facebook. But Kaixin is now being eclipsed by competitors Sina Weibo and Tencent WeChat.
Cheng, 41, has switched his focus to mobile games, with an investment of up to 200 million yuan (US$32 million). He is betting that mobile games and other innovative services will bring Kaixin, which literally means “happiness” in Chinese, back to the forefront of the Internet industry.
“It’s like another entrepreneurship experience,” said Cheng during an interview when the country’s biggest annual game fair Chinajoy (China Digital Entertainment Expo) was held recently in Shanghai, “If we can’t succeed within three years, we will miss the wave.”
As a veteran of the industry, he said he understood that change and competition are always driving forces in the dot-com realm, especially in China, with more than 500 million Internet users.
Before founding Kaixin, Cheng worked at Sina for 10 years. He has a university major in nuclear chemistry and a deep background in new technologies.
Cheng, well-known for a low-key style, rarely talks to the media since he founded Kaixin in 2008. He is a man of few but carefully chosen words.
Q: Why did you decide to expand into the mobile game industry?
A: Mobile games will be one of the most profitable businesses in the IT industry because people spend more and more time on handsets and tablets. Every industry giant is crazy about it, and Kaixin is no exception.
In the first half of this year, China’s mobile game industry revenue jumped 66.1 percent to 5 billion yuan.
Q: What will you do with mobile games? Is it too late for you to enter the existing market sphere?
A: We have established a team of 60 people specifically designing mobile games. We will kick off 10 games by the end of this year. Within one or two years, we plan to invest 100 million yuan to 200 million yuan to seek opportunities on acquiring or investing in mobile game studios.
I admit that many firms have entered the sector, some very competitive.
Our unique advantages include a strong social platform and potential partnership with Sina and Tencent (investors in Kaixin).
Q: It’s said that you were forced to expand into games because of slow growth in your social networking platform. Is it right?
A: Now we have three strategy businesses. Social service brings us popularity and online traffic. Mobile games are expected to bring us profit and income. The third one is innovation services, representing the future trend.
Q: What is innovation service?
A: We will keep researching new technologies and tools for more than 100 million Kaixin users by using a specific team. We have failed in some projects, but two or three with cool features are going to debut soon.
Personally, I find the model of Snapchat interesting. (Snapchat allows users to send photos or video to friends and then it disappears within seconds.)
Q: What do you think of the convergence of games and social services? Are there any equivalents of Facebook or Zynga in China?
A: Facebook and Zynga were stories several years ago.
On social and mobile games, China doesn’t need to copy models from other countries. We have our own ideas and business models. Even in the United States, young people are turning to Snapchat and other applications from Facebook.
Q: Which kind of games will be popular in China?
A: Users in China and the United States like different kinds of games. Many US players are addicted to games requiring logical thinking, vocabulary or calculations, like Scrabble. Chinese users are fond of simple ones and the games can be shared on social platforms like WeChat or Kaixin.
Q: What’s your working schedule like?
A: I work hard. It’s just like another start to create a new business.
In the dot-com industry, you can’t rest or you have to accept failure. It changes everything everyday.
Q: What’s your view on a good business model for social platforms? Does it take a long period for social services like Kaixin, Weibo and Weixin to make money?
A: In the Internet era, there will be money if we have traffic. I have to admit that we are still seeking more business models for social services besides advertising and game operations.
I can tell you something that happened around 1999 when I was at Sina. My team and I were excited when our search service finally brought real income for the first time. The income was only several thousand yuan a month then.
The only exception is email service. It hasn’t brought websites solid income but it brings traffic and user loyalty.
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